Asset management organizations face a variety of challenges today, including rising customer expectations, changing regulations, and a continued internal push for growth. In a rapidly changing environment, “business as usual” simply won’t cut it anymore.
To successfully prepare for a quickly evolving future, savvy asset management firms must rethink their business processes and revise their operations. Use these five options to reimagine and reboot your asset management firm’s operations.
- Reduce activities that don’t raise capital. In most asset management firms, 60% to 70% of employees engage in non-alpha and non-capital-generating activities. The expenditures of these activities often squeeze profit margins because they consume a large percentage of a firm’s expenses without replacing any revenue. To be competitive both today and in future, your firm must restructure to reduce non-alpha-generating or capital-raising activities.
One potential option: outsourcing some non-differentiating tasks. For instance, rather than paying full-time salaries and benefits for in-house operational and finance resources, consider outsourcing those tasks to companies that specialize in such activities.
- Increase automation. As your business becomes increasingly globalized, you must continually expand product offerings and process transactions faster. Today, you and a growing number of firms recognize the necessity of automating processes and a scalable operation. Many firms leverage outsourced or hosted technology solutions to help their resources focus on more business-critical functions. By eliminating manual processes (and the potential resulting errors), these firms can create a virtuous cycle of less labor-intensive auditing, and gain greater trust in their data and processes.
- Boost monitoring and reporting functions. Information drives modern business, so firms need more robust monitoring and reporting functions to facilitate decision-making, risk management and compliance. One priority may be to provide centralized data storage with access to cleaner and more accurate information. This will help fuel enhanced monitoring and reporting, and mitigate compliance risk with reporting-heavy regulations like MiFID II.
- Integrate front-, mid- and back-office systems. It’s no longer feasible for firms to cobble together networks of disparate “best of breed” solutions to serve their clients. Many firms are finding the need to embrace more tightly integrated front-, mid- and back-office systems. Having the right solutions partner—one that can fully support your business growth strategy and help you focus on marketplace differentiators—will help you and your firm to create a competitive advantage.
To get started, work to identify which technology solutions will help your firm stay on top or ahead of environmental changes in areas such as cybersecurity, continuity planning/disaster recovery, risk management and compliance. How integrated are those systems today? How much overhead is required to manage the multiple relationships? What is the risk for your firm if one of the providers upgrades, change or retires a system you’ve integrated?
- Analyze workforce needs and work to meet them. Take a step back and start to consider the skills and resources necessary to future-ready operations. An important piece of the workforce-planning puzzle is acquiring the necessary skill sets among operations staff to achieve the firm’s business and transformation goals. How will you invest in training your current associates in new technologies and business processes? How will you onboard new talent and minimize their time to productivity? Are your processes set up to scale with the changing business environment, or will you need to continuously keep adding headcount in a world of compressed margins? Do you need to invest resources, people and time in non-differentiating operational activities at all, or should you be focused on what actually drives your growth?
As the world of asset management—and the global business world—continue to change, you know that to keep or gain a competitive edge, you must be equipped for new realities. Many of the transformative actions that need to be taken can be aided by choosing the right partner. For more information about how Broadridge can help, contact us or read our Executive Brief “5 Considerations to Build a Future-Ready Business Model”.